Shopify relies on Shop Cash rewards to boost app sales

“We gifted the store with Cash Out to increase engagement, and it worked,” Anna Decilveo, director of merchandising and brand partnerships for the Shop app, told Modern Retail. “I know a lot of friends who said, ‘That’s so generous,’ so the gift worked.”

Platform-hosted sales events like these are becoming a fixture on the retail calendar. On Thursday, TikTok Shop announced a “Deals for You” day, while Walmart is hosting its “biggest sales event ever” more than a week before Amazon’s Prime Day. The two-day sale event kicks off July 16 and is announced weeks in advance.

Decilveo couldn’t say whether another Shop Week will officially take place, but it’s on the table. “It was a huge, huge success from a shopping perspective,” she said.

For Shopify, Shopify Week capped a year of experimenting with new ways to encourage shoppers to make in-app purchases. Shopify first launched the Shop app in 2020 as part of a rebranded app called Arrive. Initially, the Shop app offered simple package tracking features. But since then, Shopify has added more sections to encourage discovery, such as “stores we think you’ll like” and in-app purchases.

Shop Cash launched in June 2023. Customers can use cashback for discounts in the Shop app, with additional bonuses for brands that sign up to Shop Campaigns. This service allows brands to set customer acquisition costs and advertising budgets with Shop Cash offers included. This model, which only charges brands for converted customers, has attracted companies such as Blueland, Glossier and Caraway.

Shop Cash is one of many products Shopify plans to use to fuel its growth. Merchant Solutions revenue was $1.4 billion in the latest quarter, up 20% year over year. The results were attributed to growth in GMV, continued penetration of Shopify Payments, and growing adoption of new products like Shop Cash.

CEO Harley Finkelstein said during a May earnings call that in-store campaigns are one example of how Shopify can use data and insights to drive merchant marketing. “We’re already seeing merchants and amazing brands using it and driving increased revenue through significantly greater visibility and significantly better conversions,” he said, according to a transcript.

According to Shopify data, brands see an average 2.2x increase in sales through the Shop app when they use Shop Campaigns. For some brands, it has become a useful customer acquisition tool that beats the costs of other digital advertising methods. Margot James, performance marketer for Shopify’s suite of more than 40 brands called OpenStore, said Shop Campaigns were a valuable tool for attracting new customers. It’s a place to experiment, she said, at a time when other channels are becoming more expensive or less efficient. “It’s a unique way to promote your brand” she said. “It’s such an easy campaign, so why not use it?”

There is some evidence to suggest that the Shop app customer experience is slightly higher, with customers acquired through Shop campaigns having a 31% return rate compared to the industry average of 28%.

James said in-store campaigns usually work best if the brand keeps customer acquisition costs low. However, going too far outside the suggested ranges will not generate much volume. “It’s best to start in the middle and evaluate the performance and then test it,” she said.

Shopify didn’t disclose how many brands it added in the past year, but Decilveo said it’s grown significantly. One of the biggest advantages is that brands only pay the cost of acquiring a customer when that person makes a purchase — as opposed to paying upfront for a campaign.

“If they browse your brand and maybe like a product and then come back three weeks later, you’re not paying for them to browse your brand or your products,” Decilveo said. “You’re only paying if they actually convert and become a customer.”

Once enabled, a brand can choose to advertise the Shop Cash offer only in the Shop app. This is made possible by one of the latest beta updates Store campaign ads to be displayed on marketing platforms such as Google and Meta. From there, Shopify takes and combines the creative from the uploaded product photos and placements. It also controls the Shop Cash multiplier deal offered to the customer – which Decilveo says can vary by brand and buyer. “The multiplier is actually something more personalized and dynamic for each user,” she said.

From a consumer perspective, Shopify played around with the design and display of Shop Cash in its first year. Offers are displayed in more places, including: on the product page as well as on dedicated Shop Cash search pages.

Despite all the improvements, it’s still tough to get people to shop on a third-party app. Noel Reinhold, director of technology and consumer digital marketing at e-commerce agency Front Row, said that for most customers, the Shop app is a very small part of their DTC strategy—perhaps less than a tenth of sales. “In terms of consumer orders, we don’t see a lot of that yet,” he said. Still, customers are starting to ask about it, and it’s usually not a big expense to get them started.

“If you’re already using Shopify and don’t want to do anything right away, your product catalog is already available in Shopify, so it’s easy to set up,” he added.

As a consumer, Reinhold decided to browse the Shop app during Shopping Week when he saw an extra $5 added to his account. He had previously used the app mainly to check deliveries. But he said he sees the platform growing with more marketing. “It’s one way to build a customer base,” he said.